Why Europe needs a Truth and Reconciliation Commission

Establishing facts on EMU would have many advantages

by David Marsh

Tue 23 Jul 2013

When many southern European countries are confronted with record unemployment and multi-year recessions, apportioning blame for the malaise in economic and monetary union (EMU) may appear a secondary issue. Yet I believe that setting up, sooner or later, an EMU Truth and Reconciliation Commission to look into the causes of failure, and ask why remedial measures were not taken earlier, should be a priority for Europe.

Although one shouldn't take historical analogies too far, there are some similarities with the process in South Africa in the 1990s after the abolition of apartheid, with the establishment of juridical procedures to establish the facts behind gross violations of human rights and to pave the way for reconciliation. Both victims and perpetrators – who could request amnesties from civil and criminal prosecution - were invited to give statements about their experiences. Fortunately, EMU has not involved crimes of violence. Yet there is certainly a need for reconciliation. In the interplay between creditors and debtors in the euro bloc, there are some parallels with South Africa. In both cases, perpetrators and victims were, in a sense, in the same boat together: locked in built-in conflict in a system which, ultimately, could not work.

Palpably, prime responsibility for the poor position of the euro bloc lies with the debtors. Yet the creditor countries were also guilty. They failed to halt reckless lending to borrowers that were plainly raising money on far too generous terms. This is an area where we will anyway hear plenty of arguments from the Athens government in 2014 when, for the first time, official European credits to Greece will have to be restructured.

Beyond the field of satisfying intellectual curiosity, enacting a Truth and Reconciliation Commission could have three important advantages.

First, from a political point of view, it could engender a proper allocation of responsibility among creditors and debtors - and among the various politicians and technocrats involved in two decades of European decision-making. This might help induce the necessary humility and open-mindedness needed to bring about genuine solutions to the European disorder.

Second, on a technical level, exploring past errors – for example, the lack of reaction by either the European Central Bank (ECB) or European governments to exaggerated credit expansion in the southern countries in the early years of EMU, caused by far-too-low interest rates for these countries – could provide pointers for avoiding future mistakes.

Third, from a moral and sociological viewpoint, a thorough investigation could help achieve some kind of justice for the millions of people who have lost jobs in the euro crisis.

This initiative could be undertaken by a combination of universities and think-tanks, on a Europe-wide level. This could be like a travelling assizes, meeting in different places before a public audience to allow local people from different countries to gain insights into what went wrong and who was responsible.

The euro imbroglio needs to be put into the context of the trans-Atlantic financial crisis and the inability to control risk by financial market participants nearly everywhere. However, in the case of the euro, specific European phenomena were in play. Some very important witnesses among Europe's past and present politicians and technocrats could be called. The time for preparing such an exercise, which could be both illuminating and useful, is now.